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October 16, 1998
Xx. Xxxxxxx Xxxxxx
Meditrust Mortgage Investments, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Re: Karrington Health, Inc. - Outstanding Leases and Mortgages
To Meditrust
Dear Xx. Xxxxxx:
This letter will set forth the terms and conditions under which Sunrise
Assisted Living, Inc. ("Sunrise") will acquire (i) certain properties subject
to leases and (ii) certain mortgage loans from Meditrust Corporation or its
affiliates ("Meditrust"). The terms and conditions of the offer by Sunrise are
as follows:
1. Assets to be Acquired. Sunrise will acquire (a) the fee simple title
to six (6) separate properties which are subject to leases with Karrington
Health, Inc. or its affiliates ("Karrington"), which leases are identified on
Exhibit A attached hereto (the "Leases") plus (b) four (4) separate mortgage
notes secured by first lien mortgages on the properties identified on Exhibit A
(the "Mortgages").
2 Purchase Price. The Purchase Price shall be the sum of: (i) the total
amount advanced by Meditrust under each Lease and the related lease
documentation (including any draws made thereunder since the inception of the
Leases and the amount advanced by Meditrust to acquire the applicable
property); plus (ii) the outstanding principal balance under the notes secured
by the Mortgages plus all other accounts outstanding under the applicable loan
documents as of the closing date due to additional advances under the loan
documents; plus (iii) one percent (1%) of the sum of the amounts described in
clauses (i) and (ii) above. The outstanding Lease and Mortgage obligations
will be computed as of the closing date hereunder. All cash collateral
(including, without limitation, all interest accrued thereon) currently held by
Meditrust under the lease and loan documentation will be retained by Meditrust,
but shall be credited to the purchase price at closing. Exhibit A contains the
amounts described in clauses (i) and (ii) above as of October 15, 1998).
3. Terms of Payment. Sunrise will pay the entire purchase price by wired
funds at closing.
4. Deposit. Prior to the close of business on the next business day
after Xxxxxxx's receipt of this countersigned agreement, Sunrise will deliver a
deposit in the amount of $100,000 to Meditrust. The deposit shall be credited
to purchase price at closing.
5. Closing Date. Closing of the purchase and sale of the Leases and
Mortgages shall take place on December 2, 1999 at the offices of Xxxxxx,
XxXxxxxxx & Fish, LLP in Boston, unless the parties otherwise mutually agree in
writing.
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6. Title. Title to the properties subject to the Leases shall be good
and marketable fee simple title, insurable by a nationally recognized title
insurance company at commercially reasonable rates, free from any matter which
would materially adversely affect the right to use the properties for the uses
allowed under the applicable lease and loan documentation, but subject to any
Leases with Xxxxxxxxxx. Sunrise acknowledges that each of the Leases contains
a right of first refusal in favor of Xxxxxxxxxx and that this Agreement and
Meditrust's obligations hereunder (and acceptance hereof) will be subject to
compliance with the terms and conditions of such rights of first refusals. The
Mortgages shall each constitute a first lien mortgage, insured by a lender's
policy of title insurance issued by a nationally recognized title insurance
company, subject only to commercially reasonable exceptions. At closing, an
endorsement to such lender's title insurance policies shall be issued
reflecting the assignment of the Mortgages to Sunrise and changing the insured
party from Meditrust Mortgage Investments, Inc. to Sunrise. Sunrise will be
responsible for all costs of title insurance.
7. Authority. Meditrust represents and warrants to Sunrise that it is
the owner of the Leases and Mortgages and has not pledged any of the Leases or
Mortgages or any interest therein to any other party.
8. Documentation. Promptly after complete execution of this Agreement,
Meditrust will provide Sunrise with all nonproprietary information in its
possession with respect to the Leases and Mortgages, including, without
limitation, closing binders and related due diligence materials with respect to
the Leases, Mortgages and real property related thereto.
9. Obligations Pending Closing. Meditrust agrees that from the date
hereof it will maintain its relationship with Xxxxxxxxxx in the normal and
usual manner. Meditrust will not agree to any modification or amendments to
the Leases or Mortgages without the prior consent of Sunrise, which consent
shall not be unreasonably withheld. Meditrust will not declare any default
under any Lease or Mortgage without providing Sunrise with five (5) days
written notice thereof. Meditrust will not make any additional advances or
incur any expenses under the Leases and Mortgages for which Sunrise will be
obligated to pay or reimburse Meditrust without providing two (2) business days
written notice to Sunrise.
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10. Closing Deliveries. At closing, Meditrust shall deliver to Sunrise
all reasonable documentation (in form and substance reasonably acceptable to
Sunrise and Meditrust) required to transfer and convey the Leases and Mortgages
to Sunrise, including, without limitation: (i) a deed with respect to each
property subject to the Leases, in substantially the same form as the
applicable deed conveying such property to Meditrust, (ii) an assignment of
Meditrust's interest in and to the Leases and related lease documents, with no
representation from Meditrust other than as set forth in Paragraph 7 hereof,
(iii) an assignment of the Mortgages and related loan documents in recordable
form with no representation from Meditrust other than as set forth in Paragraph
7 hereof, (iv) the original Note and original Mortgage with respect to each of
the Mortgages, (v) a certificate of Meditrust with respect to the status of
each of the Leases and Mortgages, including the outstanding obligations or
balance relating thereto, the date through which each has been paid, and a
statement of any default of which Meditrust is aware, (vi) a FIRPTA
certificate, (vii) originals of any guarantees, pledge assignments, and other
documentation executed and delivered in connection with the Leases and
Mortgages, (viii) reasonable evidence of authority of the officer executing the
documents on behalf of Meditrust and (ix) the original owner's and lender's
policies of title insurance insuring Meditrust with respect to the Leases and
Mortgages, respectively.
At closing, Sunrise will deliver to Meditrust all reasonable documentation (in
form and substance reasonably acceptable to Sunrise and Meditrust) required to
assume Meditrust's obligations under the Leases and Mortgages including,
without limitation: (i) an assumption of Meditrust's interest in and to the
Leases and the other related lease documents, (ii) an assumption of Meditrust's
obligations under the Mortgages and related loan documents in recordable form
and (iii) reasonable evidence of authority of the officer executing the
documents on behalf of Sunrise.
12. Adjustments. All lease payments and interest under the Mortgages
shall be adjusted as of the closing date. Any other items with respect to the
Leases for which Meditrust is responsible will be subject to the usual and
appropriate adjustments. Expenses of examination of title, and title insurance
policies and endorsement, shall be paid by Sunrise. All state, county and
local recording, deed stamp, transfer, mortgage and other taxes payable in
connection with the conveyance and/or assignments shall be paid by Sunrise.
13. Termination. If Sunrise breaches this Agreement, and such breach
continues for three (3) business days after written notice thereof, Meditrust
may terminate this Agreement by written notice to Sunrise and as the sole
remedy, at law or in equity, of Meditrust as a consequence of any such default
by Sunrise, Sunrise shall pay to Meditrust the sum of One Million Dollars
($1,000,000), which sum the parties fix and settle as liquidated damages. The
deposit shall be applied toward the liquidated damages.
14. Acceptance of Offer. This offer must be accepted by Meditrust and its
acceptance communicated to Sunrise prior to 5:00 p.m. Saturday, October 17,
1998 or this offer will automatically expire. Acceptance of the offer may be
communicated by facsimile to (000) 000-0000.
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15. Assignment. Sunrise may not assign its rights and obligations
hereunder to any other party; however, Sunrise may designate any one or more
nominee(s) to take title to the assets to be conveyed or assigned hereunder.
Notwithstanding any such designation, Sunrise shall not be released from any of
its obligations hereunder.
Very truly yours,
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
President
OFFER ACCEPTED:
Meditrust Corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Date: October 16, 1998
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